Retail Sales Decline for Third Straight Month

In spite of firming consumer confidence and improvements in the labor market, retail sales declined in February for the third consecutive month. Spending on U.S. retail and food services fell by 0.6% last month following a decline of 0.8% in January and 0.9% in December. Core retail sales, which strip out vehicle sales, building supply centers and gasoline stations, were flat. 

Weakness in the retail sector was broad based. In February, eight of the thirteen major sales categories posted a decline in sales over the month. The largest drop occurred at motor vehicle and parts dealers where sales fell by 2.5%. Building material and garden supply dealers also posted a sharp decline (-2.3%), followed by electronic and appliance stores, general merchandize stores, and miscellaneous store retailers, all of which saw sales fall by 1.2% over the month. Smaller declines were posted by health and personal care stores (-0.7%); food services and drinking places (-0.6%); and furniture and home furnishings stores (-0.1%).

Not all retailers had cause for complaint last month. Sectors that recorded an increase in February were sporting goods, hobby, book and music stores (2.3%); nonstore retailers (2.2%); gasoline stations (1.5%, on rising prices); and food and beverage stores (0.3%). Sales at clothing and clothing accessory stores were flat.

On a year-over-year basis, total retail sales in February were up by 1.7%. Every major sector posted a gain over the last 12 months except for gasoline stations, which saw sales plummet by 23.0%. The largest gains were in nonstore retailers (8.6%); food services and drinking places (7.7%); and furniture stores (5.8%).

Current trends in retail sales are running counter to improving fundamentals that support increased consumer spending. The obvious culprits are the piles of snow on the ground and the nasty weather that hit a large part of the U.S. again this winter. Although the retail sales numbers are seasonally adjusted, the seasonal factors are based on a history that does not always reflect the situation in the current year. Therefore, if weather is harsher than normal, sales will fall below normal even after accounting for seasonality. Given the booming labor market and recent wage gains, we should see most of the retail sales lost to the winter weather made up as the spring thaw sets in. 

Source:  http://www.census.gov/retail/marts/www/marts_current.pdf